Local procurement in SGR project stands at Sh10bn

July 14, 2015

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By MARGARET NJUGUNAH, According to Cabinet Secretary Adan Mohamed, Kenyan manufactures and suppliers of locally made content are taking advantage of the stipulated 40 percent slot which is dedicated to sourcing materials from the local market/FILENAIROBI, Kenya, Jul 14 – Local manufacturers have been major beneficiaries of the ongoing Standard Gauge Railway construction as indicated by the inflow of Sh10 billion in local procurement.

According to Cabinet Secretary Adan Mohamed, Kenyan manufactures and suppliers of locally made content are taking advantage of the stipulated 40 percent slot which is dedicated to sourcing materials from the local market.

So far, the project has looped in over 300 Kenyan suppliers and over 36 sub-contractors in the railway construction.

“It is our aspiration that more and more local manufacturers are able to supply the needed materials, which are of the required quality, for the Standard Gauge Railway construction,” Mohammed said.

However, the amount of imported materials is still high with the overall procurement of content being in excess of Sh23 billion.

Mohammed stated that this is because of lack of some specific materials needed for construction in Kenya.

Cement, for instance, had to be imported at the beginning of the project as the required 52.5 grade that was needed for construction was not being manufactured by any local plant.

“The team had to import at least 6,000 metric tonnes of cement at the beginning because there was no local plant that was producing it. However, local manufacturers upgraded to the required quality and all the cement that is being used in the construction is now procured locally,” he explained.

To protect locally made materials, the government has redefined exactly what local materials are.

According to Mohammed, raw products made elsewhere but supplied locally by the locals do not pass as local content.

“We have agreed that any equipment that is imported from outside Kenya but supplied by Kenyans does not count as locally manufactured goods. Of course there are exceptions, but we are discussing that to see how to best promote local content,” he said.

Concerns have however been raised on the process of choosing local procurement. These include manufacturers being allowed to make repeat supplies, whether to lump together materials, such as electrical materials, from different companies and supply them in unison and the overall transparency of procurement processes of the local industries among others.

But the government has done its part to make opportunities available to local manufacturers. According to Mohammed, China Rail & Bridge Corporation (CRBC), Kenya Railway Services and Kenya Bureau of Standards among other key stakeholders came together to outline the materials needed in order to know what was locally available and what was not.

“Before we import anything from outside, we ensure that there is no local manufacturer who has it,” Mohammed said.

Regardless of the challenges, progress on the construction of the rail has been made. Already, 46 percent of earthworks have been completed with over 35 percent of bridges being completed too.

The Chairman of Kenya Association of Manufacturers Pradeep Paunrana therefore called out to manufacturers to take advantage of the Standard Gauge Railway construction to showcase their work.

“Those who did not have the capacity to produce earlier but can now produce should come on board and tap into the forty percent procurement opportunity left for Kenyans,” Paunrana said.

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MARGARET NJUGUNAH I'm a business reporter based in Nairobi, Kenya. I'm passionate about feature stories on personal finance, development and technology.